The President of the United States says he has a plan to address inflation. NBC provides an annotated transcript of this week’s State of the Union Address. Some points of interest:
Inflation rose 7.5% for January over the previous year, beating the 40-year high set in December. Price increases hit food, electricity and housing, in particular.
Inflation calculations are always problematic. They aim to quantify something not quantifiable. Every individual experiences currency debasement differently, but at least 7.5% is much higher than the 2% inflation target set by the Fed.
Biden tries to level with the average American, saying:
Inflation is robbing them of the gains they might otherwise feel.
This is true. No benefits come from the perpetual loss of purchasing power of the dollar. There is no mystery here. The unilateral increase of the prices of goods and services normally only happens when a government or central bank embarks on a money creation scheme; the latest being the creation of roughly $4.6 trillion to buy US Treasuries and Mortgage-backed securities.
Biden doesn’t address the Fed’s balance sheet. He does, however, unveil a “plan to fight inflation.” He follows with:
Lower your costs, not your wages.
Make more cars and semiconductors in America.
More infrastructure and innovation in America.
More goods moving faster and cheaper in America.
More jobs where you can earn a good living in America.
And instead of relying on foreign supply chains, let’s make it in America.
I call it building a better America.
It’s not as easy as the President makes it seem.
Costs cannot be lowered because the President urges costs to be lowered any more than he can increase innovation by decree. His words are hollow.
Unfortunately, like pretending debt doesn’t matter, in the real world, one’s opinion is irrelevant. A rude awakening is on the horizon for those who believe things work better in America for no reason other than “because it’s America.”
More concerning is the support for this plan Biden alleges to have. Biden claims:
My plan to fight inflation will lower your costs and lower the deficit.
17 Nobel laureates in economics say my plan will ease long-term inflationary pressures. Top business leaders and most Americans support my plan.
Biden promises to cut the cost of child care and prescription drugs. Using a 13-year-old boy named Joshua Davis with Type 1 diabetes as an example, Biden asks for price controls on insulin at $35 a month; while one can sympathize with young Joshua, his story says nothing about how the economy works. Biden then pledges to cut energy costs by $500 via “combating climate change.” No discussion regarding economics, debt nor the money supply, was offered, only government guarantees.
Nothing “novel” was provided for the American People. It’s all been said before. Perhaps the only thing to learn from this is a story from antiquity. Legend has it, Alexander the Great asked Diogenes what he wanted, Diogenes replied that Alexander can: “Stand aside to stop blocking the sun.” If these Nobel laureates cared more for history, understanding ideas of liberty and freedom, rather than endorsing more central planning, they could have asked Biden, Congress, and the Fed to simply leave the people alone. America can build back better without a central planning committee. People shine brighter without the weight of inflationary policies crushing their savings, livelihood, and future anyway.
